SEA Limited 🇸🇬
NYSE: SE • EV: $55.5B • Last Close: $104.23
SEA Limited started life as a mobile gaming company. Founder Forest Li used the huge success of his mobile gaming platform to fund a new e-commerce division in 2015 called Shopee and since then have expanded into digital finance products like payment processing, mobile wallets, and credit.
Shopee is the largest e-commerce player on Southeast Asia with a ~50% market share. They are also rapidly gaining share in Brazil. Investors are concerned over increased competition and a decision to accelerate investment into their logistics network. SEA’s dominate market share and mobile gaming cash flows gives it the fire power to reinvest in the business and continue to expand their logistics moat.
SEA’s EBIDTA margin has fallen to 0.7% of GMV during their recent reinvestment cycle. This compares to their previous peak of 1.2% in 2023 and to Amazon and Mercado Libre’s current margins closer to the 3% - 4% range. Management guides to a longer term margin of 2% - 3%. At a 2% margin, SEA trades for an EV/EBITDA of 10x.
Mattel 🇺🇸
NASDAQ: MAT • EV: $5.4B • Last Close: $13.42
Mattel is a global toy and media company. They own brands like Barbie and Hot Wheels. The market is pricing this as a stagnant business and are worried that kids will shift towards digital content. Underappreciated is Mattel’s IP library. It’s one of the last independent portfolios of high quality brands and would be worth a lot to a variety of buyers.
Shares trade for 8.5x Mattel’s last 5 year average FCF and 10x their guided FY26 adjusted EPS. They’ve repurchased 21% of shares outstanding since 2023, a pace they expect to continue.
A VIC Writeup from 2022 (Link).
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Disclosure: This newsletter does not provide investment advice. Information presented is for informational purposes only and should not be considered a recommendation to buy or sell securities. The author may or may not own the securities discussed.